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Is real estate in the Heights really this hot?


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About 4 days ago, 1606 Harvard went on the market for $459,000.  That's $386 per square foot.

 

Today, it appears the listing has disappeared -- could it have sold that fast?  Anyone have access to someone that is "in the know" about this house?

 

If I could get $386 per square foot for my house, I'd sell today!

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Haha! Sounds like we have a Heights homeowner who hasn't yet had the pleasure of peaking behind his walls yet. You are in for a HUGE surprise...assuming you even know what to look for. Even with the a

I refi'd my mortgage 3 months ago, and the appraised price psf ended up well over $300 psf. Standard lot, but extensive renovations, including new garage with apartment above. But $300 is $300.   Wh

Is your statement about Heights residents only staying for 7 yrs and moving on based on any data or evidence? Early-1990s West U, in my opinion, is exactly the situation the Heights is in today; profe

About 4 days ago, 1606 Harvard went on the market for $459,000. That's $386 per square foot.

Today, it appears the listing has disappeared -- could it have sold that fast? Anyone have access to someone that is "in the know" about this house?

Sounds like a bargain to me, which is why it probably sold so fast. I bet they had 15+ showings the first day and at least two offers. Edited by TGM
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I refi'd my mortgage 3 months ago, and the appraised price psf ended up well over $300 psf. Standard lot, but extensive renovations, including new garage with apartment above. But $300 is $300.

 

What is a bit scary is that these prices have pretty much jumped just in the last year. Mine is up over 15% in 2 years.

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It's not going to last. New home sales nationwide are already coming down hard as rates go up. Typically there's a few months lag between rate moves and home price reaction, but its coming. Houston is relatively insulated, but I've had so many people tell me Houston housing prices are just going higher that I firmly believe they have to pull back a little bit

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1606 Harvard was sold as is in 2012 and got renovated. Given the market, it may have sold before it listed. Realtors will still put it up on HAR to do a victory lap and get their name out. Per sq ft isn't a very solid metric for the Heights as there is so much variation from one property to the next and from one street to another. Harvard and Cortland get a premium. So do Woodland. Bayland and Highland. Slight discount if you are too close to Shep, Main or the highways. Harvard and Travis get a bump in price, but I have not seen much difference between homes between 20th and 11th in the EHD from those zoned to Harvard. Updated kitchen and bath with tasteful high end stuff goes a long way versus crunchy older house flipper junk.

But prices are way up based on very solid demand bumping up against low inventory. Initially the spike in prices was more a result of pent up demand coming up against very little construction during the bust. But now investors are getting very aggressive and building where ever they can get property. Yet it is not enough to keep up with demand. It is not just the Heights. Sales in West U dropped because inventory is so low.

Fact of the matter is that Houston is no longer cheap. But it is still relatively affordable. In San Fran, you need $800k just to get in the market. There is pretty much no such thing as a single family home under 1 mil in the decent parts of DC inside the beltway.

I think prices have plateaued for the short term and the steep run up in prices will moderate just due to the fact that rising prices make the market more exclusive. But as long as Houston continues to grow, prices will not come back at all. If there is a big shock in the energy biz, we all lose our hats.

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What is a bit scary is that these prices have pretty much jumped just in the last year. Mine is up over 15% in 2 years.

I'm sure the influx of people moving to Houston is a factor. I actually agree with s3mh's take that someone with $900k from a home sale in San Francisco views $500k in Houston as a sweet deal.

What we don't tell them is that July electric bill to cool a 3500sqf house is a doozy. That and property taxes.

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I'm sure the influx of people moving to Houston is a factor. I actually agree with s3mh's take that someone with $900k from a home sale in San Francisco views $500k in Houston as a sweet deal.

What we don't tell them is that July electric bill to cool a 3500sqf house is a doozy. That and property taxes.

 

On taxes, someone who lives in a $800k house is probably paying  north of $10k in California state income tax. Even with our higher property tax rates, the  new resident comes out ahead. When we moved back to Houston from California, our property taxes went from $1900 to $3600, but our state income tax went from $6000 to $0. That's a big win for us.

 

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When you talk to people who move to Houston from places like CA, NY, UK, Norway, etc., it's like Superman leaving Krypton and coming to Earth. Everything (still) just seems so cheap. A $750k, 3000-s.f. house in the Heights seems like a raging bargain. They can live in a close-in neighborhood, in a nicer house than they could buy with twice the money in the market they're coming from.

 

 

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You may be the only person to think that in the entire world.

 

 You have never been to the Midwest. 

 

Inside the loop, most of the new to newer apartment complexes want $1500 for a 1 bed.  When I first moved inside the loop, $1,000-$1,200 was as high as anyone would dare ask in the newest complex.  There were plenty of big complexes renting for $800-900.  Now, $800-900 will get you into an old garden style junker. 

 

Most of the new and newer townhomes in Rice Military are $400k and up.  A few years ago, $350k would buy you all the townhome you needed in Rice Military.  And we all know what has happened in the Heights.

 

In Cleveland, OH, a friend of mine just moved into the newest complex with a lake view, just off of downtown and is paying $1,000 a month for 800 sq ft.  His sister bought a flipped house in Fairview Park (closer in suburb, 15 min to downtown) for $180k (2000 sq ft).  Quiet neighborhood, no crime, great schools, walking distance to the Rocky River Reservation.  That just does not exist within 15 miles of downtown Houston. 

 

Houston is certainly cheaper that the other major metros (DC, NY, CHI, BOS, LA, San Fran), but it used to be that Houston even compared well with the lesser metros.  Now, Houston is definitely more expensive than the smaller markets.  Houston is not cheap anymore.  If things continue to appreciate at the current pace, Houston will definitely lose its cost competitiveness.  All the cheap land is gone in Houston.  If you own, it is a great time to be in Houston.  If you are buying, better get in before things get too good.

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Yeah houston doesn't exactly end once you go outside of 610 (despite what we all think/feel).  Still plenty of cheap apartments and houses outside of the beltway.

 

 

I have family in Omaha... its similar pricing there to the burbs here... whats your point? 

 

 

You can't compare Houston's inner city to lesser metro's inner city, that wouldn't make any sense. 

 

 

 

Houston is Cheap.  Some pockets of houston have greatly increased in value lately (mostly in the loop) but overall for houston the increase hasn't been nearly as drastic plus the starting point was insanely low.  Compare the innerloop to similar area of any other similar metro and it is obviously still a bargain.  (AKA CHEAP)

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Houston remains cheap in the outer areas, and there are thousands of homes at reasonable prices. At some point, redevelopment will move to the near North side, then on to Denver Harbor, etc. There is a lot of land inside the Loop with potential.

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Yeah houston doesn't exactly end once you go outside of 610 (despite what we all think/feel).  Still plenty of cheap apartments and houses outside of the beltway.

 

 

I have family in Omaha... its similar pricing there to the burbs here... whats your point? 

 

 

You can't compare Houston's inner city to lesser metro's inner city, that wouldn't make any sense. 

 

 

 

Houston is Cheap.  Some pockets of houston have greatly increased in value lately (mostly in the loop) but overall for houston the increase hasn't been nearly as drastic plus the starting point was insanely low.  Compare the innerloop to similar area of any other similar metro and it is obviously still a bargain.  (AKA CHEAP)

 

 That all gets back to the study Rice did that debunked the Houston cost of living.  You can get a great house out in Cypress with great schools, but your transportation costs and time spent sitting in the car negate the cost savings.  In smaller cities, you can cut your commute time by a third compared to Houston and get the same house with great schools. 

 

Of course, you say that you cannot compare Houston's inner city to lesser metro's inner city, but that is probably what people say in NY, CHI, BOS, LA, San Fran when comparing their cost of living to Houston. 

 

And Houston isn't that much cheaper than comparable big cities anymore.  $2,000 a month will get you an apartment in most of the comparable cities' urban core, save and except Manhattan.  $1,500 a month in Houston is cheaper, but not that much.  If trends continue, Houston will start to bump up against the other major metros and won't even be that much cheaper.

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Blah, Blah, Blah, Blah, Blah....

http://www.infoplease.com/business/economy/cost-living-index-us-cities.html

S3mh sounds like he knows what he is talking about until facts show up.

Oh, for a good laugh, compare Houston to Cleveland. :lol:

Way to cherry pick data from 2010. I bought my house for about $80k less than it would get today back in 2010. If you would actually read some of my posts you would understand that my whole point is that the recent boom in residential housing has pushed Houston out of its previous comfort zone on housing costs. If you told someone in 2010 that they would have to pay 1500 for an apartment inside the loop they would tell you that you were nuts. Houston's housing costs have crossed a threshold and are no longer cheap. You can pretend it is still 2010 to try to find irrelevant facts. But otherwise the reality is clear to everyone else.

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The market in the Height has cooled off since its peak in May.  It is still high, but in May there was a frenzy where everyone was literally running around like Chickens with their heads cut off.  Realtors were telling their clients they had to be over asking to stand a chance, and relatively modestly priced homes were getting into bidding wars...People want to be in the Heights right now and it all peaked in May.  There were a few really high prices that did close, but several, I can think of at least 3 properties just off hand without digging through HAR realtor data, that went pending, but failed to close because they could not appraise.

 

It became a real problem...people were bidding up houses for more than they were worth, and then banks refused to lend...One house in particular went pending twice, different buyers, did not appraise either time and returned to the market with the same asking price and has now been sitting for 4 weeks.

 

The market is up about 20% since 2006...new construction is driving about 65% of the sales, and existing bungalows and newer construction is the remaining 35%.  Based on the data and comps I see now, we have peaked and prices will likely stay where they are or fall modestly in the next year.  The rapid appreciation of this area was unsustainable, the increase in opportunity crime (car & house burglary) are causing more folks who bought here to rethink their choices, and the lack of quality schools will prevent the housing from skyrocketing any further.  Most of the new residents are families with children or planning on having children, and they are generally only 7 year residents, generally moving on once Kindergarten of first grade hits.  

 

If the Heights could improve the schools, the market in the neighborhood would continue to rise....but until the schools catch up with the price, I think we have reached a peak. 

 

 

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Speaking of cherry picking, did anyone catch the cherry picked data s3mh used in his posts to attempt to make Cleveland cheaper than Houston? Anyone catch the apartment rent numbers that he completely pulled out of his ass? And using his own guess at what his house is worth...is there anything more cherry picked than that?

 

Typical s3mh post. I don't know why he even wastes his time.

 

 Yes.  There is something that is more cherry picked than that.  Using 2010 numbers to argue that the recent spike in housing prices in Houston have not affected the cost of living for Houston.  In fact, calling that cherry picking is being too kind.  It is just outright dumb.  The very first post in this thread is about the most recent rise in housing prices.  All the arguments about whether Houston is cheap or not are centered on the recent rise in housing prices.  And you come in slinging your usual childish insults and tell us how the 2010 cost of living numbers show that the rise in 2013 housing costs are just my imagination.  If you do not like the numbers I related for Cleveland, come up with your own and prove me wrong.  However, this time you will need to use numbers that are actually from the relevant time period for starters.

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The market in the Height has cooled off since its peak in May.  It is still high, but in May there was a frenzy where everyone was literally running around like Chickens with their heads cut off.  Realtors were telling their clients they had to be over asking to stand a chance, and relatively modestly priced homes were getting into bidding wars...People want to be in the Heights right now and it all peaked in May.  There were a few really high prices that did close, but several, I can think of at least 3 properties just off hand without digging through HAR realtor data, that went pending, but failed to close because they could not appraise.

 

It became a real problem...people were bidding up houses for more than they were worth, and then banks refused to lend...One house in particular went pending twice, different buyers, did not appraise either time and returned to the market with the same asking price and has now been sitting for 4 weeks.

 

The market is up about 20% since 2006...new construction is driving about 65% of the sales, and existing bungalows and newer construction is the remaining 35%.  Based on the data and comps I see now, we have peaked and prices will likely stay where they are or fall modestly in the next year.  The rapid appreciation of this area was unsustainable, the increase in opportunity crime (car & house burglary) are causing more folks who bought here to rethink their choices, and the lack of quality schools will prevent the housing from skyrocketing any further.  Most of the new residents are families with children or planning on having children, and they are generally only 7 year residents, generally moving on once Kindergarten of first grade hits.  

 

If the Heights could improve the schools, the market in the neighborhood would continue to rise....but until the schools catch up with the price, I think we have reached a peak. 

 

 Plateau, yes.  Peak.  No.  Things have leveled off because sellers are now pricing according to the current market.  In the spring, a lot of sellers were pricing behind the curve and bidding wars erupted.  As you noted, there is finally some significant new construction coming onto the market.  In the spring, there just wasn't close to enough to keep up with demand.  But if the demand continues unabated, the amount of new construction will bell curve and begin to fall off as flip-able land begins to become scarce.  Cottage Grove, Shady Acres, 1st Ward, Sunset Heights, etc. are filling in very rapidly.  Once the easy land runs out, prices will surge again if demand is still high.

 

The only thing that would put a dent into demand is a bust in the economy that damaged the oil industry.  Crime and schools have been issues in the Heights since 2006 and are always issues for urban neighborhoods.  If anything, the neighborhood will become even more popular in the future as all the new retail/restaurant development continues to surge and amenities like the extension of the hike and bike and a potential park amenity at the Rutland detention pond emerge. 

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 Plateau, yes.  Peak.  No.  Things have leveled off because sellers are now pricing according to the current market.  In the spring, a lot of sellers were pricing behind the curve and bidding wars erupted.  As you noted, there is finally some significant new construction coming onto the market.  In the spring, there just wasn't close to enough to keep up with demand.  But if the demand continues unabated, the amount of new construction will bell curve and begin to fall off as flip-able land begins to become scarce.  Cottage Grove, Shady Acres, 1st Ward, Sunset Heights, etc. are filling in very rapidly.  Once the easy land runs out, prices will surge again if demand is still high.

 

The only thing that would put a dent into demand is a bust in the economy that damaged the oil industry.  Crime and schools have been issues in the Heights since 2006 and are always issues for urban neighborhoods.  If anything, the neighborhood will become even more popular in the future as all the new retail/restaurant development continues to surge and amenities like the extension of the hike and bike and a potential park amenity at the Rutland detention pond emerge. 

Peak was a bad word...plateau is a much better word.  I do not see the market increasing any more over the next year at all....The Heights has now priced itself into a bit of a corner...the newer prices are in line with areas of River Oaks, West U, Memorial, Bellaire, etc.  All of these areas have many of the same amenities as the heights, good parks, good trails, good locations to downtown and other business centers, good restaurants, close shopping, etc, but they also have way less crime and far better schools.  Prior to this year, the Heights was much cheaper than these areas...now - the Heights is priced nearly the same, and in some cases more than some comparable properties in these areas.  With smaller bungalows in the 15-1900sq size getting $300/sqft and nice new construction in the 3,000 sqft range getting$260-$300/sqft...the Heights has lost the affordability it once had....Its going to be a while before we see a notable increase in value again.  To get another 15-20% bump, the Heights is going to need to do SIGNIFICANTLY better on crime, or do SIGNIFICANTLY better with schools.  The problem with the schools being there are still too many low income apartments dragging the Heights schools down.

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Housing costs are, of course, driven by scarcity in relation to demand.  That scarcity can come from a lack of available land, or from restrictions on what can be done with available land. Houston doesn't really suffer from either of these problems.

 

If you look at the more desirable neighborhoods, the entry price to live in them hasn't really moved much, but what you get for that money HAS changed. Ten years ago, $400k would get you a bungalow in Montrose, 5 years ago, a townhouse. Today the equivalent of that monthly payment gets you an apartment.

 

In the Heights, $400k or so used to get you a single family home on a full size lot, then a single-family home on a 3300 s.f. lot, now a townhouse. 

 

Exceptions to this are places where (a) land is still cheap (it's pretty easy to find $5/sf dirt within a 30-min commute of the energy corridor), so prices are still stable; and (B) places which restrict the ability to reduce lot sizes, like River Oaks and the Villages. Houses zoned to the better SBISD schools sit on dirt that's no more expensive than Heights dirt (usually cheaper), but a comparable given house comes with four times as much of it, which is why the entry price there is north of $1M.

 

 

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Peak was a bad word...plateau is a much better word.  I do not see the market increasing any more over the next year at all....The Heights has now priced itself into a bit of a corner...the newer prices are in line with areas of River Oaks, West U, Memorial, Bellaire, etc.  All of these areas have many of the same amenities as the heights, good parks, good trails, good locations to downtown and other business centers, good restaurants, close shopping, etc, but they also have way less crime and far better schools.  Prior to this year, the Heights was much cheaper than these areas...now - the Heights is priced nearly the same, and in some cases more than some comparable properties in these areas.  With smaller bungalows in the 15-1900sq size getting $300/sqft and nice new construction in the 3,000 sqft range getting$260-$300/sqft...the Heights has lost the affordability it once had....Its going to be a while before we see a notable increase in value again.  To get another 15-20% bump, the Heights is going to need to do SIGNIFICANTLY better on crime, or do SIGNIFICANTLY better with schools.  The problem with the schools being there are still too many low income apartments dragging the Heights schools down.

 

The difference between the Heights and places like Memorial or River Oaks (close-in neighborhoods with good zoned schools), is that, while a comparable house in the Heights (3500 s.f., huge lot) is approaching the price of those neighborhoods, buyers have the option of something cheaper. Decent single-family houses in the ~2000 s.f. range, big enough for 2 kids, can still be had for around $500k. Not much available for that price in either Memorial or R.O.

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And Houston isn't that much cheaper than comparable big cities anymore.  $2,000 a month will get you an apartment in most of the comparable cities' urban core, save and except Manhattan.  $1,500 a month in Houston is cheaper, but not that much.  If trends continue, Houston will start to bump up against the other major metros and won't even be that much cheaper.

 

Ok... first thing, $2,000 a month will not get you an apartment in the city core of the other cities (at least one that is anything close to the $1,500 houston one). 

Second... not that much cheaper?  2,000 a month would be 33% more expensive... what would be too much then?  Here on earth 33% is a massive difference.

 

 

 

Houston is cheap.  FACT. (even if the heights is more expensive than it was)

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On taxes, someone who lives in a $800k house is probably paying  north of $10k in California state income tax. Even with our higher property tax rates, the  new resident comes out ahead. When we moved back to Houston from California, our property taxes went from $1900 to $3600, but our state income tax went from $6000 to $0. That's a big win for us.

 

I'm not sure your statement is always true.  Someone in an $800k house in Houston with a homestead exemption will pay about $16,000/year in property taxes (~2%).  I believe that the equivalent tax on an $800k house in CA would be about $6,000 (0.75%), so it is a wash between the two states (assuming $10k in income tax).  

 

Furthermore, once you stop working, you still have to pay the property tax every year, but your income tax is minimal.  So if your Texas home appreciates to $2 million by the time you retire, you're on the hook for $40k/year in property tax after retirement.   Meanwhile in CA, I believe you are paying property tax based on the year you bought the home (no appreciation), so about $6k, and your income is significantly lower.  So your combined income and tax bill in CA is drastically lower than someone in Texas.  

 

I'm sure in many instances someone moving to Texas is better off in terms of lifetime taxes, but I don't think that is always the case.  

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Ok... first thing, $2,000 a month will not get you an apartment in the city core of the other cities (at least one that is anything close to the $1,500 houston one). 

Second... not that much cheaper?  2,000 a month would be 33% more expensive... what would be too much then?  Here on earth 33% is a massive difference.

 

 

 

Houston is cheap.  FACT. (even if the heights is more expensive than it was)

 

 http://www.apartments.com/District-of-Columbia/Washington/Camden-Grand-Parc/22270?searchCriteria=Dy2hfU5rAXd7IxFaKtBPNxOFXed7T2UEI9u0CA0EAfydBPAxPAPXFwuIsmuQ1rK8805FxLecCevKChEhnqUGVTr2LViBHliOJNzo73e9wN6Z/j6u/cQQpyjjgAGcYo/OBa6JsfExlWu7HDlo7XnhtceYQaD7ydHsGiAWjl5rtfrFiD8ngfPAeJO/RYTGvabiAXr270fGQMqxG1759vYIcqN-|-|HVDa9cY&sid=f2132308-f67f-4825-910b-3040ce6ed9fe&stype=cityseo&match=4

 

http://www.apartmentguide.com/apartments/California/Los-Angeles/Hikari/75268/

 

http://www.columbusplaza.com/chicago-chicago/columbus-plaza-columbus-plaza/floorplans/

 

Yes, Houston is cheaper, but not cheap.  That is my point.  You are doing a nice job of trying to change the subject, but the fact is that Houston is not cheap. 

 

And $500 a month is significant except that in places like DC, San Fran, Chicago, and NY, you can get by without a car, especially now with the option of Zipcars and similar services.  When you factor that in, Houston's price advantage becomes much less significant.

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I'm not sure your statement is always true.  Someone in an $800k house in Houston with a homestead exemption will pay about $16,000/year in property taxes (~2%).  I believe that the equivalent tax on an $800k house in CA would be about $6,000 (0.75%), so it is a wash between the two states (assuming $10k in income tax).  

 

Furthermore, once you stop working, you still have to pay the property tax every year, but your income tax is minimal.  So if your Texas home appreciates to $2 million by the time you retire, you're on the hook for $40k/year in property tax after retirement.   Meanwhile in CA, I believe you are paying property tax based on the year you bought the home (no appreciation), so about $6k, and your income is significantly lower.  So your combined income and tax bill in CA is drastically lower than someone in Texas.  

 

I'm sure in many instances someone moving to Texas is better off in terms of lifetime taxes, but I don't think that is always the case.  

 

I think that you're underestimating the tax burden in California.   The main reason being that housing costs in California for comparable sizes/areas are significantly higher so you're paying taxes against a much higher selling price going in.

 

The base property tax rate in California is 1%, but there are a series of other taxes/fees that can drive that up, so generally tax rates are in the 1.25% range.  Also, while Prop 13 does limit the incremental increases in taxable property value, it's pretty hard to see significant benefit in the short term. 

 

For comparison purposes, you're referencing an approx. 3500 sq foot house for $800k in the Heights.  In a comparable neighborhood in the SF Bay Area, a similar house would be well over $2 million.

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I think that you're underestimating the tax burden in California.   The main reason being that housing costs in California for comparable sizes/areas are significantly higher so you're paying taxes against a much higher selling price going in.

 

The base property tax rate in California is 1%, but there are a series of other taxes/fees that can drive that up, so generally tax rates are in the 1.25% range.  Also, while Prop 13 does limit the incremental increases in taxable property value, it's pretty hard to see significant benefit in the short term. 

 

For comparison purposes, you're referencing an approx. 3500 sq foot house for $800k in the Heights.  In a comparable neighborhood in the SF Bay Area, a similar house would be well over $2 million.

Correct -- the analysis would be different if you were dealing with two different priced properties.   I was assuming similar priced properties -- I think most people buy what they can afford, so would be getting roughly the same priced house (albeit that house in Houston may have much more square-footage).  

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I'm not sure your statement is always true.  Someone in an $800k house in Houston with a homestead exemption will pay about $16,000/year in property taxes (~2%).  I believe that the equivalent tax on an $800k house in CA would be about $6,000 (0.75%), so it is a wash between the two states (assuming $10k in income tax).  

 

Furthermore, once you stop working, you still have to pay the property tax every year, but your income tax is minimal.  So if your Texas home appreciates to $2 million by the time you retire, you're on the hook for $40k/year in property tax after retirement.   Meanwhile in CA, I believe you are paying property tax based on the year you bought the home (no appreciation), so about $6k, and your income is significantly lower.  So your combined income and tax bill in CA is drastically lower than someone in Texas.  

 

I'm sure in many instances someone moving to Texas is better off in terms of lifetime taxes, but I don't think that is always the case.  

 

Not necessarily. There are property tax exemptions for homeowners over-65 as well as for surviving spouses. The over-65 exemption can be significant over time, since the school taxes are capped unless the homeowner makes improvements to the home. I have a couple elderly neighbors on my block who were capped years ago when property values were far less, and their overall tax rate is now a fraction (e.g. - 1/6) of those with only a homestead exemption. 

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Not necessarily. There are property tax exemptions for homeowners over-65 as well as for surviving spouses. The over-65 exemption can be significant over time, since the school taxes are capped unless the homeowner makes improvements to the home. I have a couple elderly neighbors on my block who were capped years ago when property values were far less, and their overall tax rate is now a fraction (e.g. - 1/6) of those with only a homestead exemption. 

I don't dispute this either.  I originally said that in some cases it was better tax wise for folks to move from CA to TX, but that it wasn't always the case.  And I don't know enough about the property taxes in Houston, but I thought the over-65 exemption only meant that taxes would not go up any further, not that the tax rate/amount would decrease.  That's why I suggested that at retirement on your taxes would be $40k forward.  

 

Also, the following suggest that the average CA tax rate is 0.68% (and TX is 2.57% -- this seems not to reflect the homestead exemption):  http://www.nytimes.com/2007/04/10/business/11leonhardt-avgproptaxrates.html?_r=0

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Correct -- the analysis would be different if you were dealing with two different priced properties.   I was assuming similar priced properties -- I think most people buy what they can afford, so would be getting roughly the same priced house (albeit that house in Houston may have much more square-footage).  

 

I don't think that's an accurate assumption though.  Speaking as a member of the California-ex pat community, I think that there's wide variety in how people handle that difference.  I can tell you that personally I paid about less than half for my house here than the selling price of my house in California.

 

My experience is that people are more concerned with matching or lowering their monthly payment than they are with buying a house of equivalent value and that they include taxes in that calculation.

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I don't dispute this either.  I originally said that in some cases it was better tax wise for folks to move from CA to TX, but that it wasn't always the case.  And I don't know enough about the property taxes in Houston, but I thought the over-65 exemption only meant that taxes would not go up any further, not that the tax rate/amount would decrease.  That's why I suggested that at retirement on your taxes would be $40k forward.  

 

Also, the following suggest that the average CA tax rate is 0.68% (and TX is 2.57% -- this seems not to reflect the homestead exemption):  http://www.nytimes.com/2007/04/10/business/11leonhardt-avgproptaxrates.html?_r=0

 

That's probably a weighted tax rate based on assessed values and including the cost of houses that were grandfathered into the Prop 13 laws back in the 70's. 

 

The following is from the California Legislative Analyst's website.

 

A Property Tax Bill Includes a Variety of Different Taxes and Charges. A typical California property tax bill consists of many taxes and charges including the 1 percent rate, voter–approved debt rates, parcel taxes, Mello–Roos taxes, and assessments. This report focuses primarily on the 1 percent rate, which is the largest tax on the property tax bill and the only rate that applies uniformly across every locality. The taxes due from the 1 percent rate and voter–approved debt rates are based on a property’s assessed value. The California Constitution sets the process for determining a property’s taxable value. Although there are some exceptions, a property’s assessed value typically is equal to its purchase price adjusted upward each year by 2 percent. Under the Constitution, other taxes and charges may not be based on the property’s value.

 

http://www.lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx

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 http://www.apartments.com/District-of-Columbia/Washington/Camden-Grand-Parc/22270?searchCriteria=Dy2hfU5rAXd7IxFaKtBPNxOFXed7T2UEI9u0CA0EAfydBPAxPAPXFwuIsmuQ1rK8805FxLecCevKChEhnqUGVTr2LViBHliOJNzo73e9wN6Z/j6u/cQQpyjjgAGcYo/OBa6JsfExlWu7HDlo7XnhtceYQaD7ydHsGiAWjl5rtfrFiD8ngfPAeJO/RYTGvabiAXr270fGQMqxG1759vYIcqN-|-|HVDa9cY&sid=f2132308-f67f-4825-910b-3040ce6ed9fe&stype=cityseo&match=4

 

http://www.apartmentguide.com/apartments/California/Los-Angeles/Hikari/75268/

 

http://www.columbusplaza.com/chicago-chicago/columbus-plaza-columbus-plaza/floorplans/

 

Yes, Houston is cheaper, but not cheap.  That is my point.  You are doing a nice job of trying to change the subject, but the fact is that Houston is not cheap. 

 

And $500 a month is significant except that in places like DC, San Fran, Chicago, and NY, you can get by without a car, especially now with the option of Zipcars and similar services.  When you factor that in, Houston's price advantage becomes much less significant.

 

LOL  even your own links prove my point.  There are only a few apartments from those list that are under 2,000 and they are less than 600 sq. ft. 

 

$1500 is getting you an 800 sq. ft. apt in Houston.

 

Apples to apples a 600 sq. ft apt in Houston is around 1200-1300.  

 

My old apartment (camden heights) over 5 years ago was 682 sq. ft and cost $975,  it is now $1229-1329  for the same unit.  Yep, still cheap.

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I don't think that's an accurate assumption though.  Speaking as a member of the California-ex pat community, I think that there's wide variety in how people handle that difference.  I can tell you that personally I paid about less than half for my house here than the selling price of my house in California.

 

My experience is that people are more concerned with matching or lowering their monthly payment than they are with buying a house of equivalent value and that they include taxes in that calculation.

I'm sure it differs from person to person.  Many of the folks I know that have moved here from CA have spent about the same on housing (albeit that is a limited sample set) -- your name suggest that you live in the suburbs--nothing wrong with that, but many folks from CA don't want to do that.  And Ross stated his real estate taxes were $1,900 in CA.  Assuming your rate of 1.25%, his house in CA was valued at $152,000.  Here, if his property taxes were $3,600, his house was significantly more expensive (about $180,000).  

 

I don't want to veer too far off topic though.  My point was simply that the tax situation is not as simple as some suggest (as our posts demonstrate).  

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I'm sure it differs from person to person.  Many of the folks I know that have moved here from CA have spent about the same on housing (albeit that is a limited sample set) -- your name suggest that you live in the suburbs--nothing wrong with that, but many folks from CA don't want to do that.  And Ross stated his real estate taxes were $1,900 in CA.  Assuming your rate of 1.25%, his house in CA was valued at $152,000.  Here, if his property taxes were $3,600, his house was significantly more expensive (about $180,000).  

 

I don't want to veer too far off topic though.  My point was simply that the tax situation is not as simple as some suggest (as our posts demonstrate).  

 

I agree that people are generally going to move to comparable environments.  I moved suburbs to suburbs so the cost structure was comparable.  The comparison that I provided previously on costs was an urban to urban comparison.

 

My point is simply that it's really not accurate to try to imply that there's a comparable tax expense in Texas and California.

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LOL  even your own links prove my point.  There are only a few apartments from those list that are under 2,000 and they are less than 600 sq. ft. 

 

$1500 is getting you an 800 sq. ft. apt in Houston.

 

Apples to apples a 600 sq. ft apt in Houston is around 1200-1300.  

 

My old apartment (camden heights) over 5 years ago was 682 sq. ft and cost $975,  it is now $1229-1329  for the same unit.  Yep, still cheap.

 You said you cannot get an apartment in the urban core for $2000.  I showed that you can just by posting the first thing that popped up on the internet.  You can get 600 sq feet for 1200-1300 if you live right by the highway or at an older complex that could get bought out and demoed at any moment.  The new and newer complexes generally don't go smaller than 700 sq feet and are all starting at $1500+.  Not cheap at all.   

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i also said if you did it wouldn't come close to comparing to the $1500 houston one... which is exactly what you tried to do.

 

 

1200-1300 can easily be had in a 600 sq. ft not next to the highway and in a newer complex.  (but if you had your way wouldn't all these midrises be along the highway?)

Edited by SilverJK
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i also said if you did it wouldn't come close to comparing to the $1500 houston one... which is exactly what you tried to do.

 

 

1200-1300 can easily be had in a 600 sq. ft not next to the highway and in a newer complex.  (but if you had your way wouldn't all these midrises be along the highway?)

 

Actually, the few I picked from other areas are in very prime locations.  For the scant 100 sq ft you lose, you more than make up in being in a very in demand neighborhood. 

 

1200-1300 cannot easily be had inside the loop for 600 sq feet, unless you get the unit by the dumpster, HVAC or garage entrance.  $1500 is the entry point for most of the decent complexes.  And if "newer" to you means Memorial Archstone, that is old by Houston standards as the complex has plans to be demoed.  $1,500 is not cheap. 

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Actually, the few I picked from other areas are in very prime locations.  For the scant 100 sq ft you lose, you more than make up in being in a very in demand neighborhood. 

 

1200-1300 cannot easily be had inside the loop for 600 sq feet, unless you get the unit by the dumpster, HVAC or garage entrance.  $1500 is the entry point for most of the decent complexes.  And if "newer" to you means Memorial Archstone, that is old by Houston standards as the complex has plans to be demoed.  $1,500 is not cheap. 

 

This is a bit hyberbolic; there are plenty of very nice garage apartments and units in 4plexs in both Montrose and the Heights for well under $1500. I'm not sure why there should be any priority on "new" apartment complexes, as long as quality is at least somewhat comparable.

 

 

*edited to remove unhelpful snarkiness

Edited by Texasota
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Actually, the few I picked from other areas are in very prime locations.  For the scant 100 sq ft you lose, you more than make up in being in a very in demand neighborhood. 

 

1200-1300 cannot easily be had inside the loop for 600 sq feet, unless you get the unit by the dumpster, HVAC or garage entrance.  $1500 is the entry point for most of the decent complexes.  And if "newer" to you means Memorial Archstone, that is old by Houston standards as the complex has plans to be demoed.  $1,500 is not cheap. 

 

Yeah if you went to "availalbe options" you would see that the ones you picked were also likely the unit by the dumpster/hvac/garage entrence.  One of my coworkers just signed a lease (he hasn't even moved in yet) for a nice 1 bedroom that is 750sq. ft in midtown in a newer building... It was $1300 but with a year lease they dropped it to $1200. 

 

Not quite the picture your painting. 

 

 

You can get a nice 800 sq. ft. apartment in Kingwood close to 59 for like $700 bucks.  Commute is very easy (30 minutes even in rush hour).  That is CHEAP. 

 

 

$1500 for a one bedroom in an urban core is cheap. 

 

Super elistist uber expensive One Park Place is only $2400 for a one bedroom. 

 

Houston is cheap. 

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$1500 for a one bedroom in an urban core is cheap. 

 

 

 

 That is a price point that maybe 5% of the population can afford.  Last I checked, things are called cheap because they are affordable to at least a majority of the population.  A Lamborghini Aventador costs about $400k.   When the economy was in the tank, you could probably find someone in desperate straits willing to unload one with super low mileage for $250k.  That does not make it cheap.  Houston's inner loop real estate is no longer cheap.  Prices have spiked dramatically and will only continue if there is even a mild improvement in the economy.  In two years, we will probably be talking about how cheap it was in 2013 when you could get a 1 bd in the loop for $1,500.

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Again, I think it's worth mentioning that there are functionally 2 rental markets in central Houston:

 

1. newer, larger apartment complexes: tend to be well advertised, more likely to be visible to people moving here from elsewhere.

 

2. garage apartments, duplexes, 4plexes, smaller complexes from the 60's or earlier: not well advertised, units tend to be passed on by word of mouth or sheer luck. 

 

For many younger people, particularly in the creative class, that second category is actually more desirable, and tends to be hundreds of dollars cheaper.

 

This is the only city I've lived in that has such a noticeable distinction between those two housing options, probably partially because there is just *so much* new multifamily housing going up right now.

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I'm sure it differs from person to person.  Many of the folks I know that have moved here from CA have spent about the same on housing (albeit that is a limited sample set) -- your name suggest that you live in the suburbs--nothing wrong with that, but many folks from CA don't want to do that.  And Ross stated his real estate taxes were $1,900 in CA.  Assuming your rate of 1.25%, his house in CA was valued at $152,000.  Here, if his property taxes were $3,600, his house was significantly more expensive (about $180,000).  

 

I don't want to veer too far off topic though.  My point was simply that the tax situation is not as simple as some suggest (as our posts demonstrate).  

 

California house was valued at $125k (Bakersfield was one of the cheapest places in California), Townhouse in Midtown was $160k, minus exemptions that took it pretty close to the California value. My point was more that someone living in an $800k house in California (most places) could find something in a similar neighborhood here for $250k, which means taxes will be about $5k, assuming it's not in one of the brand new MUD's that have $1.30 tax rates. The standard of living would be similar, as would the commute. If the Ca transplant buys a house for the same price, it's more of a wash, but the house will be far larger. And that doesn't include any intangibles, like less regulation and petty rules.

 

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That is a price point that maybe 5% of the population can afford. Last I checked, things are called cheap because they are affordable to at least a majority of the population. A Lamborghini Aventador costs about $400k.

Lamborghini Miuras go for $600k+ 'cause they're historic and stuff....

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..and the lack of quality schools will prevent the housing from skyrocketing any further. Most of the new residents are families with children or planning on having children, and they are generally only 7 year residents, generally moving on once Kindergarten of first grade hits.

If the Heights could improve the schools, the market in the neighborhood would continue to rise....but until the schools catch up with the price, I think we have reached a peak.

Is your statement about Heights residents only staying for 7 yrs and moving on based on any data or evidence? Early-1990s West U, in my opinion, is exactly the situation the Heights is in today; professionals on the cusp of starting or freshly started a family moving in. The schools in West U were nothing to brag about then either. It is the gentrification process that is the tide that lifts all boats. The changing demographics of the neighborhood is what will drive improved schools not the other way around. As a resident of the Heights, i can speak on behalf of myself and the friends and family i have that also live in the neighborhood that we have no plans to leave and do expect that the schools will be improving. As a matter of fact, both Travis and Harvard elementaries are already ranked and recognized schools in HISD currently. Edited by laiall
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Is your statement about Heights residents only staying for 7 yrs and moving on based on any data or evidence? Early-1990s West U, in my opinion, is exactly the situation the Heights is in today; professionals on the cusp of starting or freshly started a family moving in. The schools in West U were nothing to brag about then either. It is the gentrification process that is the tide that lifts all boats. The changing demographics of the neighborhood is what will drive improved schools not the other way around. As a resident of the Heights, i can speak on behalf of myself and the friends and family i have that also live in the neighborhood that we have no plans to leave and do expect that the schools will be improving. As a matter of fact, both Travis and Harvard elementaries are already ranked and recognized schools in HISD currently.

I agree that the yuppie-fication of West University in the 80's (not 90's) is similar to what is occurring in the Heights now, but even then West University Elementary was one of the top HISD elementary schools.  And West University was never a ghetto with rampant crime, so gentrification did not really occur.  West University has always been a middle class neighborhood, which is why the schools were always good (and I do think the good schools helped West University explode). I'm sure the Heights will get better schools, but I suspect it will take many years before they are as good as comparable schools south of 59. 

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Is your statement about Heights residents only staying for 7 yrs and moving on based on any data or evidence? Early-1990s West U, in my opinion, is exactly the situation the Heights is in today; professionals on the cusp of starting or freshly started a family moving in. The schools in West U were nothing to brag about then either. It is the gentrification process that is the tide that lifts all boats. The changing demographics of the neighborhood is what will drive improved schools not the other way around. As a resident of the Heights, i can speak on behalf of myself and the friends and family i have that also live in the neighborhood that we have no plans to leave and do expect that the schools will be improving. As a matter of fact, both Travis and Harvard elementaries are already ranked and recognized schools in HISD currently.

 

I think it's based on anecdotal evidence, but strong anecdotal evidence. You see a lot of (middle class) pre-school age kids around the neighborhood, but not a lot of (middle class) adolescents.  Gradually, as the elementary schools improve, more families will stay. At least until middle school.

 

For the five elementary schools in the Heights, I looked at the proportion of students with Free/Reduced Lunch.  HISD's website has numbers for 2007/8 thru 2011/2. Over this time period:

 

- Travis is steady at 42%

- Harvard has dropped from 67% to 41%

- Helms has dropped from 81% to 75%

- Love is steady at 92%

- Field is steady at 96%

 

As a point of comparison, River Oaks Elementary is 8%, and Oak Forest is 41%, both unchanged over the last 5 years.  Recall that 1/3 of the kids enrolled in 07/08 would still be enrolled in 11/12, so Harvard's drop from 67% to 41% is a massive change, and probably means that the incoming kindergarten classes at Harvard have probably had a lower proportion of FRL than Travis the last couple of years.  So the numbers show that at least for families zoned to Harvard and Travis, and to a lesser extent Helms, middle class families are increasingly comfortable with their local elementary school.

 

However, the story changes when you look at middle school.  Travis and Harvard feed into Hogg. If you look at the FRL proportion of the seven elementary schools that feed into Hogg, and assumed that all the students in those 7 schools moved on to Hogg MS, you would expect 70% of Hogg students to be FRL.  The actual proportion is 90%.  That means that middle class enrollment in Hogg is only 1/3 that of its feeder network. It's not clear what proportion of this drop-off is from families that stay in HISD but transfer to other middle schools (by comparison, Hamilton is 76% FRL, Lanier is 31%), and what proportion is due to gentrification lag, but it's a pretty big drop-off.  

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